Steve Davis became the CEO of ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) in 2015. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
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How Does Steve Davis’s Compensation Compare With Similar Sized Companies?
According to our data, ACADIA Pharmaceuticals Inc. has a market capitalization of US$3.0b, and pays its CEO total annual compensation worth US$15m. (This figure is for the year to 2017). While we always look at total compensation first, we note that the salary component is less, at US$700k. We examined companies with market caps from US$2.0b to US$6.4b, and discovered that the median CEO compensation of that group was US$4.9m.
Thus we can conclude that Steve Davis receives more in total compensation than the median of a group of companies in the same market, and of similar size to ACADIA Pharmaceuticals Inc.. However, this doesn’t necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at ACADIA Pharmaceuticals has changed from year to year.
Is ACADIA Pharmaceuticals Inc. Growing?
On average over the last three years, ACADIA Pharmaceuticals Inc. has shrunk earnings per share by 9.2% each year. In the last year, its revenue is up 123%.
The reduction in earnings per share, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. It’s hard to reach a conclusion about business performance right now. This may be one to watch.
Shareholders might be interested in this free visualization of analyst forecasts. .
Has ACADIA Pharmaceuticals Inc. Been A Good Investment?
Given the total loss of 14% over three years, many shareholders in ACADIA Pharmaceuticals Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
We compared total CEO remuneration at ACADIA Pharmaceuticals Inc. with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.
The growth in the business has been uninspiring, but the shareholder returns have arguably been worse, over the last three years. Shareholders may wish to consider further research. Although we don’t think the CEO pay is too high, it is probably more on the generous side of things. Whatever your view on compensation, you might want to check if insiders are buying or selling ACADIA Pharmaceuticals shares (free trial).
Or you might rather take a peek at this analytical visualization of historic cash flow, earnings and revenue.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.